A successful economy should not ultimately be judged by GDP, stock-market indices, tax receipts or government spending.

Those are measurements of activity, value or financial flows.

They are not the purpose of the economy.

The purpose of an economic system is to enable people to live:

prosperous, secure, healthy, fulfilling and free lives within the physical resources available to society.

A successful economy should enable people to create things that other people value, exchange them freely, accumulate wealth, own assets, build businesses, raise families, take risks, innovate and improve their lives.

It should provide sufficient productive capacity to support excellent infrastructure and public services, protect vulnerable people and defend the country.

It should do this without progressively consuming its natural environment, accumulating unsustainable liabilities, transferring costs to future generations or requiring ever-increasing complexity merely to keep itself functioning.

The objective is not maximum consumption.

It is not maximum taxation.

It is not maximum government.

It is not maximum GDP.

It is:

maximum sustainable human prosperity, freedom, resilience and wellbeing from the resources available to society.

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1. A fundamentally free economy

1.1 Capitalism as the default

The economy should fundamentally be capitalist.

People should generally be free to:

• work;
• create;
• trade;
• invest;
• save;
• own property;
• start businesses;
• employ people;
• develop technologies;
• take risks;
• compete;
• and retain a reasonable share of the value they create.

Voluntary exchange should be the default mechanism for allocating ordinary goods and services.

The state should intervene where there is a clear reason to do so, rather than assuming that economic activity requires continuous administrative permission.

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1.2 Economic freedom is human freedom

People should not exist primarily as economic resources for governments, corporations or other institutions.

Nobody should be compelled to work for another person without consent.

Nobody should be prevented from improving their circumstances merely to protect an incumbent organisation, profession or business model.

People should have meaningful freedom to choose:

• where they work;
• what they buy;
• what they build;
• where they invest;
• what businesses they create;
• and how they use their legitimately acquired property.

A prosperous economy requires individual agency.

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1.3 Free markets require genuine competition

A capitalist economy is not the same thing as an economy dominated by incumbent corporations.

Markets should remain contestable.

Government should prevent:

• monopoly abuse;
• regulatory capture;
• corruption;
• anti-competitive behaviour;
• artificial barriers to entry;
• protection of incumbents;
• and extraction of economic rents without corresponding value creation.

The objective is not simply private ownership.

It is:

competitive value creation.

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2. The state should be no larger than necessary

Government should have the resources and capabilities required to deliver the outcomes society democratically asks of it.

But the size of the state should be an outcome of those requirements, not an objective in itself.

The principle should be:

as much state as necessary, as little state as possible.

Every function performed by government should therefore have a clear purpose.

If an activity:

• produces no useful outcome;
• duplicates another activity;
• can safely be automated;
• can be simplified;
• can be delivered more effectively elsewhere;
• or no longer needs to exist,

government should change or stop doing it.

A capable state does not have to be an unnecessarily large state.

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3. Tax should be no higher than necessary

Taxation is necessary to fund legitimate collective activities.

But taxation also removes resources from households and businesses.

The appropriate level of taxation is therefore not:

“as high as government can collect”

nor:

“as low as politically possible”.

It is:

the minimum taxation required to efficiently fund the outcomes society has democratically chosen to provide collectively.

Conceptually:

$$T^{*} = \min T$$

subject to:

$$O_{\text{public}} \geq O_{\text{required}}$$

where:

• $T^{*}$ is the required level of taxation;
• $O_{\text{public}}$ represents delivered public outcomes;
• $O_{\text{required}}$ represents the democratically determined minimum acceptable outcomes.

Lower taxation achieved by destroying essential services is not success.

Higher taxation required because public money is being wasted is not success either.

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4. Zero waste

Economic value should not be unnecessarily destroyed.

Waste includes:

• public-sector waste;
• energy waste;
• material waste;
• food waste;
• infrastructure underutilisation;
• unnecessary bureaucracy;
• preventable illness;
• unemployment caused by avoidable barriers;
• unused buildings;
• unnecessary transport;
• duplicated systems;
• poorly allocated capital;
• and information that exists but is not used effectively.

The long-run objective should be:

$$W \rightarrow 0$$

where $W$ represents avoidable economic, physical and administrative waste.

Absolute zero waste may be physically impossible.

But avoidable waste should never be accepted merely because it is familiar.

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5. Fiscal sustainability

5.1 Government should normally live within its means

In normal economic conditions, recurring public expenditure should be funded from recurring public revenues.

The long-run objective should be:

$$R_{\text{state}} \geq E_{\text{state}}$$

where:

• $R_{\text{state}}$ is recurring state revenue;
• $E_{\text{state}}$ is recurring state expenditure.

Persistent structural deficits should not become normal operating policy.

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5.2 Borrowing should approach zero

Borrowing transfers obligations through time.

It can therefore be justified under exceptional circumstances, including:

• war;
• major national emergencies;
• severe economic shocks;
• or exceptional investments where the intergenerational case is compelling.

But borrowing should not routinely be required to operate the state.

In normal conditions:

$$B_{\text{new}} \rightarrow 0$$

The state should ultimately be capable of financing ordinary government from current revenues.

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5.3 Public debt should approach zero

Debt represents a claim on future national income.

Interest payments consume resources that could otherwise support households, investment, public services or lower taxation.

The long-term objective should therefore be:

$$D_{\text{public}} \rightarrow 0$$

subject to maintaining appropriate emergency financing capacity and avoiding economically destructive repayment strategies.

Future generations should inherit productive assets.

They should not primarily inherit bills.

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6. The state should own productive assets

A fiscally strong state should not merely have liabilities.

It should have assets.

Where public finances permit, government should accumulate diversified long-term investments through professionally governed sovereign wealth structures.

The public balance sheet should therefore contain:

$$A_{\text{public}}$$

as well as:

$$L_{\text{public}}$$

with the long-term objective of:

$$A_{\text{public}} > L_{\text{public}}$$

Public investment assets could provide:

• long-term national wealth;
• resilience during economic shocks;
• intergenerational savings;
• income to support public services;
• and reduced dependence on future taxation.

Natural-resource windfalls, asset sales and exceptional fiscal surpluses should not automatically disappear into current expenditure.

Some should become permanent national wealth.

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7. High household wealth

A prosperous country should contain prosperous households.

National prosperity should therefore be visible in household balance sheets.

People should have realistic opportunities to accumulate:

• savings;
• pensions;
• homes;
• investments;
• businesses;
• productive assets;
• and financial resilience.

The objective should not merely be high incomes.

It should be high household net wealth distributed broadly through society.

A household earning a high salary while carrying enormous housing costs, consumer debt and no assets is not necessarily economically secure.

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8. Affordable cost of living

People should be able to afford the fundamentals of a good life through ordinary productive work.

This includes:

• housing;
• energy;
• food;
• transport;
• healthcare;
• communications;
• childcare;
• education;
• insurance;
• and reasonable leisure.

The relevant economic question is not simply:

How much do people earn?

It is:

What standard of life can those earnings actually purchase?

Real disposable income matters more than nominal income.

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9. Affordable housing and broad home ownership

People who work and save should have a realistic opportunity to own a suitable home if they wish to.

Housing should primarily fulfil its function as:

somewhere to live.

It should not become an economic mechanism through which one generation becomes wealthy primarily because the next generation must borrow increasingly large amounts to obtain the same fundamental asset.

A healthy housing system should support:

• high levels of home ownership;
• adequate housing supply;
• secure rental options;
• efficient land use;
• infrastructure-led development;
• mobility;
• affordability;
• and high-quality homes.

Rising house prices are not automatically evidence of economic success.

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10. Cheap, reliable and clean energy

Energy is a fundamental input into almost every economic activity.

Its cost propagates through:

• manufacturing;
• food;
• transport;
• housing;
• digital infrastructure;
• healthcare;
• public services;
• and household living costs.

Energy prices should therefore reflect the genuine cost of providing energy and system services.

They should not contain unnecessary costs created by:

• inefficient market architecture;
• avoidable curtailment;
• unnecessary intermediaries;
• duplicated mechanisms;
• poorly targeted policy;
• excessive administrative overhead;
• or inefficient infrastructure utilisation.

The objective should be:

abundant, reliable, secure and increasingly clean energy at the lowest sustainable whole-system cost.

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11. High productivity

Long-term prosperity ultimately depends on producing more useful value from the resources available.

Productivity should therefore increase through:

• better technology;
• better infrastructure;
• better skills;
• automation;
• better management;
• efficient capital allocation;
• energy efficiency;
• digitalisation;
• scientific progress;
• and elimination of waste.

The objective is not to make people work continuously harder.

It is to enable people to accomplish more with less unnecessary effort.

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12. Technology and innovation

Technological progress should be embraced.

The economy should make it easy to:

• conduct research;
• create companies;
• test new products;
• deploy new technologies;
• attract investment;
• commercialise inventions;
• automate repetitive work;
• and scale successful ideas.

Regulation should protect legitimate public interests without unnecessarily freezing existing technologies or business models in place.

Government should ask:

How can this innovation be made safe enough to use?

rather than instinctively:

How can this activity be prevented until somebody creates a new rule for it?

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13. People should do useful and fulfilling work

Employment is not merely a mechanism for producing GDP.

Work occupies a substantial part of human life.

A healthy economy should create opportunities for people to undertake work that is:

• productive;
• appropriately rewarded;
• socially useful;
• intellectually or practically engaging;
• compatible with family life;
• and capable of providing dignity and progression.

Technology should progressively remove dangerous, repetitive and pointless work.

The objective should not be maximum hours worked.

It should be:

maximum useful human contribution with minimum unnecessary human drudgery.

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14. Reward contribution rather than extraction

Economic rewards should primarily flow towards people and organisations that create genuine value.

The economy should discourage business models based predominantly on:

• regulatory arbitrage;
• monopoly rents;
• artificial scarcity;
• political access;
• asset-price manipulation;
• exploitation of information asymmetry;
• or extracting value from systems without improving them.

Entrepreneurship should be highly rewarded.

Rent-seeking should not.

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15. A circular and resource-efficient economy

Economic activity occurs within a physical world.

Materials and energy are not infinite abstractions.

The economy should therefore progressively move towards:

• durable products;
• repairability;
• reuse;
• remanufacturing;
• recycling;
• efficient material use;
• low waste;
• clean energy;
• responsible extraction;
• and restoration of environmental damage.

The objective should be to maximise useful economic value while minimising unnecessary physical throughput and environmental harm.

Conceptually:

$$\eta_{\text{resource}} = \frac{V_{\text{useful}}} {R_{\text{consumed}}}$$

where:

• $V_{\text{useful}}$ represents useful value created;
• $R_{\text{consumed}}$ represents physical resources consumed.

A better economy increases:

$$\eta_{\text{resource}}$$

rather than assuming prosperity must require continuously increasing resource destruction.

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16. Environmental sustainability

Economic prosperity should not depend upon progressively destroying the natural systems upon which future prosperity depends.

Economic decisions should account for material impacts on:

• air;
• water;
• soil;
• biodiversity;
• climate;
• landscapes;
• oceans;
• and finite resources.

Environmental protection should be based wherever possible on measurable physical outcomes rather than symbolic activity.

The objective is not to stop economic development.

It is to make economic development physically sustainable.

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17. Demographic stability

A sustainable economy requires a reasonably stable relationship between:

• working-age population;
• children;
• retired population;
• housing;
• infrastructure;
• public services;
• labour demand;
• and productive capacity.

Population policy should therefore consider the whole system.

The objective should not be permanent population growth as a mechanism for sustaining economic statistics or fiscal structures.

Nor should it be arbitrary population reduction.

The objective should be:

a demographically sustainable population compatible with infrastructure, housing, public services, environmental constraints and long-term prosperity.

Immigration can provide enormous economic and cultural benefits.

But migration policy should be deliberate, manageable and compatible with the country's capacity to successfully integrate population change.

An economic model should not require ever-increasing population inflows merely to remain solvent.

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18. Healthy people

A prosperous economy requires healthy people.

Economic policy should therefore recognise health as productive national capital.

The objective should include:

• long healthy life expectancy;
• good childhood development;
• preventative healthcare;
• physical activity;
• good nutrition;
• clean environments;
• safe housing;
• manageable stress;
• and timely access to effective healthcare.

An economy that becomes wealthier while its population becomes progressively less healthy is not unambiguously succeeding.

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19. Opportunity and social mobility

A person's prospects should not be overwhelmingly determined by the circumstances of their birth.

People should have genuine opportunities to improve their lives through:

• education;
• work;
• entrepreneurship;
• saving;
• investment;
• mobility;
• and skill development.

The economy should reward effort, creativity, capability and contribution while providing protection against catastrophic misfortune.

The objective is not necessarily identical outcomes.

It is meaningful opportunity to participate and progress.

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20. Strong families and communities

Economic design should recognise that people do not exist only as workers and consumers.

They are members of:

• families;
• neighbourhoods;
• communities;
• voluntary organisations;
• cultural institutions;
• and social networks.

Economic success should make it possible for people to:

• raise children;
• care for relatives;
• form stable households;
• participate in communities;
• volunteer;
• pursue interests;
• and maintain relationships.

An economy that maximises measured output while making ordinary family formation economically impossible has failed an important test.

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21. A diverse and resilient economy

A strong country should not depend excessively on a single:

• industry;
• employer;
• technology;
• trading partner;
• financial centre;
• energy source;
• tax base;
• or supply chain.

Economic diversity provides resilience.

The country should maintain capability across strategically important sectors including:

• energy;
• food;
• manufacturing;
• engineering;
• finance;
• technology;
• communications;
• healthcare;
• pharmaceuticals;
• logistics;
• defence;
• construction;
• and critical infrastructure.

Specialisation creates efficiency.

Excessive dependency creates vulnerability.

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22. Secure critical services

Essential national systems should remain operable during disruption.

This includes:

• electricity;
• water;
• food;
• telecommunications;
• healthcare;
• banking and payments;
• transport;
• digital infrastructure;
• defence;
• and critical supply chains.

Efficiency should not be pursued to the point that resilience disappears.

Some redundancy is waste.

Some redundancy is insurance.

The distinction should be understood explicitly.

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23. Strategic independence without isolation

International trade is enormously valuable.

Countries should trade where doing so creates mutual benefit.

But critical national functions should not become dangerously dependent upon governments, suppliers or geopolitical relationships that cannot reasonably be relied upon.

The objective should be:

open trade without strategic naivety.

Critical dependencies should be:

• identified;
• measured;
• diversified;
• substituted where appropriate;
• or protected through strategic reserves and domestic capability.

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24. Sustainable trade

A healthy economy should create enough internationally valuable goods and services to sustainably finance the goods and services it imports.

Persistent external imbalances should be understood rather than ignored.

The objective should not necessarily be:

$$X - M = 0$$

in every period.

International investment and capital flows make that unnecessarily restrictive.

But the country's external position should remain sustainable:

$$\text{External obligations} \leq \text{Long-run capacity to service them}$$

A country should not become progressively dependent on selling domestic assets or accumulating external liabilities simply to maintain consumption.

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25. Strong productive industry

A resilient country should retain the ability to make important things.

This does not mean attempting to manufacture everything domestically.

It means retaining sufficient:

• engineering capability;
• industrial knowledge;
• manufacturing capacity;
• skilled labour;
• energy infrastructure;
• research capability;
• supply-chain competence;
• and productive capital

to remain economically and strategically capable.

Industrial capability should be treated as productive national capacity, not as nostalgia.

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26. Strong defence

Economic capability and national security are connected.

A country cannot sustainably defend itself without:

• productive capacity;
• energy;
• technology;
• engineering;
• logistics;
• finance;
• skilled people;
• resilient infrastructure;
• and credible institutions.

A prosperous economy should therefore generate sufficient surplus productive capacity to maintain credible defence without impoverishing the population.

Economic strength is a component of national security.

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27. Stable money

People should be able to trust the unit in which they:

• earn;
• save;
• invest;
• borrow;
• sign contracts;
• and plan for the future.

Persistent erosion of purchasing power damages that trust.

Price stability should therefore be treated as a core economic outcome.

Money should function reliably as:

• a medium of exchange;
• a unit of account;
• and a store of value.

People should not require sophisticated financial engineering merely to prevent ordinary savings from being progressively destroyed.

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28. Intergenerational fairness

Economic policy should not improve the position of today's population by quietly transferring disproportionate costs to future generations.

This applies to:

• debt;
• pensions;
• housing;
• infrastructure;
• natural resources;
• environmental degradation;
• taxation;
• and public-service liabilities.

Each generation should aim to leave the next generation:

more productive assets, better knowledge, better infrastructure and greater opportunity than it inherited.

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29. Resilience to shocks

A successful economy should not only perform well when everything goes according to plan.

It should remain functional during:

• recessions;
• pandemics;
• wars;
• energy shocks;
• financial crises;
• supply-chain disruptions;
• natural disasters;
• cyberattacks;
• and technological disruption.

Resilience should therefore be designed into critical economic systems rather than improvised after failure.

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30. The economy as a dynamic system

The economy should not be treated as a static machine that can be permanently optimised through one set of policies.

It is a continuously evolving system.

Let the economic state at time $t$ be represented by:

$$x_t$$

including variables such as:

• household wealth;
• real incomes;
• productivity;
• employment;
• health;
• housing affordability;
• public finances;
• energy costs;
• environmental condition;
• demographics;
• infrastructure;
• trade exposure;
• and economic resilience.

Society establishes a desired state:

$$x_t^{*}$$

The deviation is:

$$e_t = x_t^{*} - x_t$$

Government has a limited set of control inputs:

$$u_t$$

including:

• taxation;
• spending;
• regulation;
• monetary institutions;
• infrastructure investment;
• planning;
• competition policy;
• trade policy;
• education;
• research;
• and targeted interventions.

The economy then evolves according to:

$$x_{t+1} = f(x_t, u_t, d_t)$$

where $d_t$ represents disturbances outside direct government control.

The purpose of economic policy should therefore be to observe, learn and adapt — not continually add interventions without measuring whether previous interventions worked.

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31. The economic optimisation problem

The objective can be represented conceptually as:

$$\max_{\{u_t\}} V_{\text{society}}$$

where $V_{\text{society}}$ represents sustainable human prosperity, freedom, security and wellbeing.

Subject to constraints including:

$$W \rightarrow 0$$ $$B_{\text{new}} \rightarrow 0$$ $$D_{\text{public}} \rightarrow 0$$ $$T \rightarrow T_{\min}$$

while maintaining required levels of:

• public services;
• infrastructure;
• defence;
• environmental sustainability;
• individual freedom;
• social protection;
• resilience;
• demographic sustainability;
• and institutional capability.

This is important.

The optimisation objective is not:

$$\max GDP$$

It is not:

$$\max T$$

And it is not:

$$\min G$$

where $G$ represents government activity.

The objective is:

maximise sustainable societal value subject to real physical, fiscal, environmental and democratic constraints.

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32. The ultimate test

A successful economy should make it possible for an ordinary person who contributes productively to society to reasonably expect to:

• afford a comfortable home;
• afford sufficient energy;
• eat well;
• raise a family if they choose;
• access excellent essential services;
• save;
• accumulate assets;
• enjoy leisure;
• travel;
• pursue interests;
• withstand reasonable financial shocks;
• retire with dignity;
• and expect their children to have at least as much opportunity as they did.

Businesses should be able to:

• start easily;
• compete fairly;
• access skills and capital;
• obtain reliable infrastructure;
• innovate;
• invest;
• grow;
• fail without catastrophe;
• and succeed without requiring political connections.

Government should be able to:

• fund excellent essential services;
• maintain infrastructure;
• protect vulnerable people;
• defend the country;
• respond to emergencies;
• invest for the future;
• and progressively accumulate national wealth

without requiring permanently increasing taxation, borrowing or monetary instability.

The country should be:

• productive;
• innovative;
• wealthy;
• healthy;
• environmentally sustainable;
• internationally competitive;
• strategically resilient;
• demographically sustainable;
• socially cohesive;
• and secure.

Above all:

The economy should serve human beings. Human beings should not exist merely to service the economy.

Economic growth is valuable where it represents greater real prosperity.

Technology is valuable where it expands human capability.

Markets are valuable because they enable decentralised human cooperation.

Government is valuable where collective action produces outcomes individuals and markets cannot adequately produce alone.

Capital is valuable because it allows society to build productive capacity for the future.

None of these are ends in themselves.

The ultimate economic outcome is a society in which free people can create, contribute, prosper and live fulfilling lives without consuming the inheritance of those who come after them.